Stocks End Lower, but Log Best Week in May

Stocks closed lower in thin trading Friday as investors hesitated to stay long over the three-day Memorial Day holiday weekend amid ongoing worries over the euro zone.

Still, all three major indexes posted their best weekly gains for the month, snapping a three-week losing streak.

The Dow Jones Industrial Average fell 74.92 points or 0.60 percent, to close at 12,454.83. The blue-chip index has yet to see a two-day win streak this month.

The S&P 500 slipped 2.86 points, or 0.22 percent, to finish at 1,317.82. The Nasdaq erased 1.85 points, or 0.07 percent, to end at 2,837.53. The Dow and Nasdaq are on pace for their worst month since 2010.

The CBOE Volatility Index, widely considered the best gauge of fear in the market, ended near 22.

For the week, the Dow gained 0.69 percent, the S&P 500 rallied 1.74 percent, and the Nasdaq soared 2.11 percent. Home Depot was the biggest weekly gainer on the Dow, while Pfizer lagged.

All 10 S&P sectors finished in positive territory for the week, led by materials and consumerdiscretionary.

“It’s been a brutal month…and a lot of guys are still hiding today,” said Gordon Charlop, managing director at Rosenblatt Securities. “Everyone’s looking at Europe—the June 17Greek elections—and until we get some clarity there, it’s buyer beware. This chart is looking exactly like last year.” (What Happened to Stocks? Most Unloved in 50 Years)

European shares closed flat, as some traders looked to book profits on the back of a two-day rally with fears over Greece still lurking in the background. The euro briefly dipped below $1.25, nearing a 23-month low.

Adding to jitters, Spain's Bankia asked the state for a bailout of 19 billion euros, more than double what the government had expected earlier this week. Shares of the Spanish bank were halted earlier during European trading. And S&P downgraded the bankto 'double-B-plus' from 'triple-B-minus.' The agency also cut its ratings on another four Spanish banks.

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Meanwhile, concerns continued to brew over ongoing flight of capital from European banks.

"We estimate a further 200 billion euros in flight from each of Spain and Italy is quite likely without further policy action," according to a note from Citi. "Economic deterioration, ratings downgrades and especially a Greek exit would almost certainly significantly accelerate the timescale and increase the amounts of these outflows."

In the latest over Facebook's IPO debacle, Citigroup said its Automated Trading Desk saw trading losses of around $20 million, according to sources. Facebook shares have plunged almost 17 percent for the week. (Read More: Still Like Facebook? There’s an ETF for That.)

This comes after Knight Capital Group and Citadel Securities also reported losses earlier this week. UBS, the other large market maker involved in Facebook's IPO, has not disclosed any losses.

Not even a better-than-expected consumer sentiment report could help lift equities. Consumer sentiment climbed in May to its best level since October 2007, with the index hitting 79.3, according to the Thomson Reuters/University of Michigan's final reading.